Nader Agha hands over control of Moss Landing desal proposal

The owner of an East Bay private equity firm has assumed control over a Moss Landing desalination project proposed by Monterey Peninsula developer Nader Agha.

At late Wednesday's Pacific Grove City Council meeting, Don Lew of Concord-based JDL Development LLC announced he had taken over the project — formerly known as the People's Moss Landing Desal Project, now named the Regional Desalinization Project at Moss Landing Commercial Park — and that Agha was no longer involved. Sources said Lew told the council he was assembling an expert team to back the proposal, though he didn't offer many specifics.

Lew, who was accompanied by former Pacific Grove mayor and current WaterPlus Executive Director Carmelita Garcia, made the announcement during an update on three local desal projects: the former People's Project; a proposal from California American Water working its way through the Public Utilities Commission; and a proposal from DeepWater Desal.

DeepWater Desal's proposal is also at Moss Landing and recently secured an agreement with the city of Salinas to develop desalinated water and wholesale power for use and sale.

Agha had reached an agreement on a preliminary partnership with Pacific Grove on the People's Project last summer.

In a release issued Thursday, Agha announced Lew was "joining the Moss Landing Commercial Park as Senior Managing Director" to oversee the development of the project, noting Lew's experience as an engineer with Bechtel Power Corp. Lew worked for Bechtel for about six years in the 1970s, building nuclear and coal-fired power plants. His online resume touts investment banking and corporate finance experience with Drexel Burnham Lambert, Merrill Lynch and Credit Suisse, along with private mortgage banking experience.

Neither Lew nor Agha would agree to speak to The Herald, and Lew said he was declining on Agha's advice.

Lew would only say he was "working to make sure everyone's expectations are met." He referred to media coverage as a "source of contention in the community" and said he would "rather be judged by performance rather than what was said or promised."

Lew apparently has acquired a controlling interest in the Moss Landing Commercial Park site, previously owned by Agha. Sources said he has reported discussing his proposal with the state Public Utilities Commission, Cal Am, Dynegy (which owns the power plant on the site), the Monterey Peninsula Water Management District and an unnamed national desal project contractor.

According to sources, Lew has been exploring the possibility of his proposal being studied at the project level in the PUC's environmental review of Cal Am's project, along with a public-private partnership and water purchase agreement with Cal Am. Sources said he is also exploring a potential agreement with the water management district, which is issuing a call for current and potential desal project proposals as a contingency if Cal Am's proposal fails.

The talks with Dynegy apparently involve access to the power plant's energy resources, as well as its intake and outfall capacity.

Cal Am spokeswoman Catherine Bowie confirmed Cal Am officials have met and talked to Lew, starting several months ago, but said there have been no formal discussions and the company remains committed to its current proposal.

Water management district General Manager Dave Stoldt acknowledged talks with Lew going back a few weeks, and said the district's staff is looking into his proposal.

"We're talking, but we're doing our own investigation," Stoldt said.

Pacific Grove City Manager Thomas Frutchey said the City Council would likely consider the future of its agreement with Agha as soon as its next meeting Jan. 2, but is "clearly on the sidelines."

"We're all still trying to figure out the ramifications," Frutchey said, saying talks with Agha had largely stalled.

Councilman Dan Miller said Lew's proposal and its impact were "kind of nebulous right now" and said he believed this was an opportunity for the city to "take a step back" and assess the situation with so many new developments occurring.

Miller said the city initially got involved because no other public agency was. He said the city now has a number of other water-related initiatives on its plate, including a formal role in Cal Am's project proceedings at the PUC and three smaller, supplemental water-supply projects being studied as part of the PUC's environmental review.

"There are a whole lot of questions that need to get answered," Miller said. "It's probably best to just step back and see what happens."

In Thursday's release, Agha said Lew was "looking forward to working with the City of Pacific Grove as the potential public agency."

Miller said Agha has paid more than $60,000 of the city's costs in working on the project agreements, and had agreed to pay up to $650,000 for the city's efforts, including an EIR.